British taxpayers may have to find more cash to prop up the ailing euro after George Osborne backed a move to increase the size of the global bailout fund to rescue indebted European countries.

The chancellor, speaking at the G20 summit in Paris, said he was willing to consider a plan to increase the International Monetary Fund's firepower, provided a rescue deal had been agreed that would bring the two-year sovereign debt crisis to an end. Pumping more money into the Washington-based lender was "no substitute", he said, for European leaders hammering out the package of financial measures required to restore stability in the eurozone.

Osborne's qualified support for the creation of a larger global safety net could see the UK commit further loans to the IMF, though officials said a comprehensive rescue deal would make extra demands unlikely. His remarks were designed to support moves by G20 finance ministers to arrive at a definitive solution to the crisis while appeasing rightwing Tory MPs who have voiced concerns about extending further loans to the eurozone.

His comments came as European leaders continued to wrangle over the size and shape of the fund required to bail out Greece and prevent Italy and Spain from collapse. The make-or-break moment could come at a summit of EU leaders next Sunday (23 October) when Germany and France have promised to set out a plan that would stop the debt crisis spreading to other countries, protect Europe's embattled banks and prevent the global economy from tipping back into recession.

German chancellor Angela Merkel has refused to be drawn on whether the package will amount to the "big bazooka" demanded by financial markets. Last week she played down speculation that the €440bn European financial stability facility (EFSF) agreed by all eurozone countries would be expanded to nearer €2 trillion. The EFSF has the resources to cope with bailouts for Greece, Portugal and Ireland, but unless enlarged would be overwhelmed by the need to rescue a bigger economy such as Italy or Spain.

Osborne said the Paris talks had made clear the urgency with which eurozone leaders needed to agree measures to shore up their banks, bolster the EFSF, and develop a sustainable solution for Greece – code for allowing Athens to default on at least half of its loans.

"[The crisis] remains the epicentre of the world's current economic problems," he said. "The European council is clearly the moment when people are expecting something quite impressive."

It is understood detailed discussions over the focus of the EFSF and how to expand its remit are likely to continue up until the Cannes summit of world leaders in November. Several eurozone countries are wary of expanding the fund, fearful that it will provide a green light to Italy and Spain to relax their debt repayment plans.

Holland, Finland and Austria are allied with Germany in calling for private investors, including large European banks and US investment funds, to take bigger losses on their loans to Greece as part of an overall rescue package. Investors have so far rejected plans to increase an agreed loss of 21% to nearer 40%, saying Greece remains on track to cut its debts and ease the burden on its main creditor, the European Central Bank.

Concern that 20 or 30 European banks would be forced to seek extra capital, probably from taxpayers, has alarmed Brussels, increasing the urgency to find a way to protect sovereign debts without wrecking bank balance sheets.

The G20 delayed a decision on boosting the IMF's current bailout fund, which could be doubled in size, though the IMF's dominant shareholders, including the US, Japan, Germany and China, are content with its £270bn of resources.

US treasury secretary Timothy Geithner said that, like the UK, Canada and Australia, the US was open to discussions about a larger IMF fund, but that most of its resources remained available. "They [the IMF] have very substantial resources that are uncommitted," he said.